1. STRATEGY and COMPETITION Universiti Teknikal Malaysia Melaka (UTeM)
Production Planning and Control
Haeryip Sihombing
Universiti Teknikal Malaysia Melaka (UTeM) 1
BMFP 4513

2. Topic Areas of PPC Course
Aggregate Planning
Scheduling
Supply Chain
Simulation
Lean production
Management of Information System
Prerequisite topics:
Forecasting

3. Functional Areas of the Firm
Operations
(product design, manufacturing,
product quality, process
efficiency, customer service,
inventory management…)
Finance
(views manufacturing
management as portfolio
management  risk reduced
by diversification, by 1969,
70% of largest firms has
no dominant business)
Marketing
(often conservative
product analysis,
imitative/innovative,
IBM & Xerox)

4. What is Strategy ?
Strategy is a common vision that unites an organization, provides consistency in decisions, and keeps the organization moving in the right direction

5. Time Horizons for Strategic Decisions
1. Long Term Decisions ( > year)  Strategic decision
Locating and Sizing New Facilities
Finding New Markets for Products
Mission Statement: meeting quality objectives
2. Intermediate Term Decisions (weeks or month)
Forecasting Product Demand
Determining Manpower Needs
Setting Channels of Distribution
Equipment Purchases and Maintenance
3. Short Term Decisions (hours or days)  Tactical decision
Purchasing
Shift Scheduling and Maintenance
Inventory Control

6. The Elements of Strategy

7. Decision Horizons of Manufacturing Strategy

8. History of Production and OM
Major Thrust of the Industrial Revolution
Factories tended to be small. Boss had total control. Little regard for workers safety or workers rights.
Production Manager Position
Frederick Taylor champions the idea of “scientific management”.
As complexity grows specializations take hold.
Inventory Control Manager
Purchasing Manager
Scheduling Supervisor
Quality Control Manager etc.

9. GLOBALIZATION COMPETITION
Global competition is heating up to an unprecedented degree. It appears that several factors favor the success of some industries in some countries
For example:
Germany: printing presses, luxury cars, chemicals
Switzerland: pharmaceuticals, chocolate
Sweden: heavy trucks, mining equipment
United States: personal computers, software, entertainment
Japan: automobiles, consumer electronics

10. Porter’s Thesis
Famed management guru, Michael Porter, has developed a theory to explain the determinants of national competitive advantage. These include:
Factor Conditions
(Land, Labor,Capital, etc.)
Demand Conditions
(local marketplace may be more sophisticated/demanding than world marketplace)
Related and Supporting Industries
Firm Strategy, structure, rivalry
(e.g.: Germans are strong technically, Italian family structure, Japanese management methods)

11. Time-Based Competition
“Time-based competitors focus on the bigger picture, on the entire value-delivery system. They attempt to transform an entire organization into one focused on the total time required to deliver a product or service. Their goal is not to devise the best way to perform a task, but to either eliminate the task altogether or perform it in parallel with other talks so that over-all system response time is reduced. Becoming a time-based competitor requires making revolutionary changes in the ways that processes are organized” (Blackburn(1991).
Being not only the first to market but the first to volume production as well gives a firm a decided advantage.

12. How Do Firms Differentiate Themselves from Competitors?
Low Cost Leaders: Some examples include
WalMart and Costco in Retailing
Korean automakers (Hyundai, Kia, etc.)
e machines personal computers
High Quality (and price) Leaders. Ex:
Mercedes Benz automobiles
Rolex Watches
(some firms do both: Chevrolet and Cadillac)

13. Understand Tradeoffs Example: Made-to-Order Pizza
Fresh, Natural Ingredients
Toppings & Crust Choice
Slow to Cook
Expensive Ingredients
Low Volume Ovens
QUALITY
QUALITY & DESIGN FLEXIBILITY
VOLUME FLEXIBILITY
TIME
COST

14. Some Dimensions of Competition
Re-engineering of the Business Process
Streamlining process
JIT Deliveries
Cutting waste
Time-based competition
Shortening time to delivery
Competing on Quality

15. Business Process Re-engineering
The process of taking a cold hard look at the way that things are done. Term coined by Hammer and Champy in their 1993 book.
Classic Example: IBM Credit Corporation. The process had been broken down to a series of multiple steps, each having substantial delays. Approval required from 6 days to 2 weeks. The process was re-engineered so that a single specialist would handle a request from beginning to end. The result was that turnaround time was slashed to an average of 4 hours!

16. Just-In-Time
JIT is a production control system that grew out of Toyota’s kanban system. It is a philosophy of production control (also know as lean production) that attempts to reduce inventories to an absolute minimum. It has become pretty much a standard way of thinking in many industries (especially the automobile.)
We will discuss JIT and its relationship to MRP in next session course.

17. The Product Life-Cycle Curve

18. The Product/Process Matrix

19. So you have an idea what others do … and you have a business idea…

20. OPERATION AS A SYSTEM

21. DECISION MAKING

22. A Framework for Manufacturing Strategy
Customer Needs
New and Current
Products
Performance Priorities
and Requirements
Quality, Dependability,
Speed, Flexibility, and Price
Operations & Supplier Capabilities
Technology
People
Systems
R&D
CIM
JIT
TQM
Distribution
Support Platforms
Financial Management
Human Resource Management
Information Management
Enterprise Capabilities
Strategic Vision

23. PRODUCTION SYSTEM

24. CAPACITY Level of capacity Size of capacity changes
Handling excess demand
Hiring/firing workers
Need for new facilities

25. FACILITIES Best size for facility Large or small facilities
Facility focus
Facility location

26. HUMAN RESOURCES Skill levels required Degree of autonomy Policies
Profit sharing
Individual or team work
Type of supervision
Levels of management
Training

27. QUALITY Target level Measurement Employee involvement Training
Systems needed to ensure quality
Maintaining quality awareness
Evaluating quality efforts
Determining customer perceptions

28. SOURCING Degree of vertical integration Supplier selection
Supplier relationship
Supplier quality
Supplier cooperation

29. OPERATIONS PRIORITIES
Cost
Quality
Delivery Flexibility
Delivery Speed
Delivery Reliability
Coping with Changes in Demand
Flexibility and New Product Introduction Speed

30. The TRANSFORMATION PROCESS

31. MANAGEMENT IN e-BUSINESS

32. TYPES OF B2B TRANSACTIONS

33. GLOBALIZED THE BUSINESS

34. COMPETITION

35. STRATEGIC DECISIONS IN OPERATIONS

36. Example : WAL-MART

37. Product Vs. Process Vs. Technology

38. Matrix

39. ISSUES and TRENDS

40. The END